WINDING UP OF A COMPANY

UNDER THE NEW ACT

Jyoti Srivastava
Partner, Legal Imperials
[Head Litigation, Arbitration, Corporate
Advisory]
LL.B, IPR (Cert.), PGDADR, Mediator (ICADR); Legal Aid
Counsel, Delhi District Court



DEFINITION OF A COMPANY
The Companies
registered under
the previous Acts
Section 3 of the
Indian Companies
Act, 1956
The Companies
registered under
the Companies
Act.
LIFE CYCLE OF A COMPANY


MODES OF WINDING UP
TRIBUNAL
Compulsory
MEMBERS
Voluntary
CREDITORS
Voluntary
WINDING UP: MEANING
Ends the life of the
Company
Assets &properties are
distributed between
shareholders and
creditors
At the end of the
process the company
has no assets and no
liabilities
Realization of assets
Payment of liability
Distribution of surplus

RELEVANT SECTIONS FOR WINDING UP
UNDER THE OLD COMPANIES ACT
CRITERIA FOR WINDING UP
Company is commercially insolvent
Object of the winding up petition should not be recovery.
A three weeks statutory notice must have been issued and the debtor
failed to repay the debt.
Live Debt.
Admitted debt and not disputed.
Debt should be not less than Rs.500/-.
CRITERIA FOR WINDING UP
UNDER THE OLD ACT
Special resolution of the Company
Company unable to pay debts
No business within 1 year from its
incorporation or suspends its business for a
whole year;
Minimum number of members is reduced
below 2(private Co.) and 7 (public company);
NEW ACT ON
1. The company is unable to pay
its debts which is a situation
when:
The company on the demand of
the creditor a sum within 21
days of receipt of the demand
notice is unable to provide
adequate security or is unable
to restructure the debt or
compound the debt to the
reasonable satisfaction of the
creditor.
If the execution decree in favour
of creditor is returned
unsatisfied,
If it is proved to the satisfaction
of the Tribunal that the company
is unable to pay its debts.



REASONS FOR
WINDING UP
OTHER REASONS FOR WINDING
UP
Special Resolution
Against the Sovereignty, integrity, security,
public order, decency, morality of India
Winding up by Tribunal
ROC
Default in filing annual returns/statements for
five financial years
Opinion of the Tribunal
WINDING UP PROCESS BY
TRIBUNAL
Appointment
of OL
Issue Notice
to Company
Public Notice
Objection to
Petition
Court Order
Presentation
of petition
Winding up takes management out of
the hands of the BOD
Thank You
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Legal Imperials